EXHIBIT 99.1
(DYNAMEX LOGO)
1870 Crown Drive
Dallas, TX 75234
214-561-7500
Fax: (214) 561-7499
FOR IMMEDIATE RELEASE
For further information contact:
Ray Schmitz
Vice President and Chief Financial Officer
(214) 561-7503
ray.schmitz@dynamex.com
DYNAMEX ANNOUNCES FIRST QUARTER
FISCAL YEAR 2004 RESULTS
FIRST QUARTER HIGHLIGHTS:
o SALES INCREASE 13.5% TO $70 MILLION.
o NET INCOME INCREASES 14.3% TO $2.2 MILLION OR $0.20 PER FULLY DILUTED
SHARE.
o EXPANDS LOGISTICS CENTER IN CHICAGO.
o BEGINS SERVICE IN NEW MARKETS.
o MANAGEMENT REAFFIRMS FY 2004 OUTLOOK.
DECEMBER 3, 2003 -- DALLAS, TEXAS -- Dynamex Inc. (Amex: DDN), a leading
provider of same-day delivery and logistics services in the United States and
Canada, today announced net income of $2.2 million or $0.20 diluted earnings per
share for the first quarter of FY 2004, an increase of 14.3% compared to the
same period last year.
Sales increased 13.5% to $70 million in the FY 2004 first quarter compared to
the prior year, the second consecutive quarterly sales record for the Company.
Sales were positively impacted by a 15.9% increase in the average exchange rate
between the Canadian dollar and the U.S. dollar compared to the prior year.
Excluding the effect of the exchange rate, sales increased 8.2% this year
compared to last year. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") were $4.2 million compared to $4.1 million in the same
quarter last year (see Reconciliation of Non-GAAP Financial Measures on page 8
of this release).
Selling, general and administrative ("SG&A") expenses increased 8.0% to $15.5
million in the FY 2004 first quarter compared to the prior year period. As a
percentage of sales, SG&A expenses were 22.1% in FY 2004 compared to 23.2% in
the prior year. Approximately 50% of the increase is due to the change in the
exchange rate between the Canadian dollar and the U.S. dollar. The remaining
increase in the current year quarter is primarily attributable to the relocation
and expansion of our Chicago facility, the cost of additional personnel to
manage and service significant new business startups in a number of U.S.
locations, an increase in compensation expense related to a larger sales force
and higher sales commissions from new
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DYNAMEX-FIRST QUARTER FISCAL YEAR 2004
December 3, 2003
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business, the expensing of stock options beginning this fiscal year, higher
communication and software maintenance fees and increased state unemployment
taxes and health insurance premiums.
Other income for the FY 2004 first quarter was $88,000 compared to $14,000 in
the prior year period. The increase is primarily attributable to foreign
currency transaction gains realized on the payment of Canadian dollar
denominated inter-company royalties and interest to the U.S. parent in the
current year quarter.
FIRST QUARTER HIGHLIGHTS
"We are very pleased with the results for the quarter," said Dynamex Chairman
and CEO, Rick McClelland. "Our momentum in the same-day transportation industry
continues to increase as evidenced by our 13.5% increase in sales and 14.3%
increase in net income. We attribute this success to our outstanding workforce,
our investment in the largest sales organization in our industry, our focus on
regional and national customers and a business model that is geared to perform
well in just about any economic environment because of our non-asset based,
variable cost structure plus a service menu that allows Dynamex to scale
operations to meet our customers' requirements.
"Our position in the same-day transportation industry is unmatched and
strengthening," McClelland added. "No other single provider can match our scale,
services, experience and coverage throughout the United States and Canada. This
major differentiation between Dynamex and other providers is becoming
increasingly evident to prospective customers as we continue to win new
business. For example, during the past 120 days, Dynamex established just under
200 additional routes in 23 markets for certain National Accounts. Some of these
installations were in new markets for Dynamex including Nevada and Michigan as
well as additional locations in California.
"In order to meet this demand, we had to deploy start up teams in multiple
markets simultaneously and at the same time add to our operational capabilities
in order to meet new ongoing requirements. Although extremely challenging, the
start-ups were successful both in terms of operational execution and economic
results. This success was especially important as the on-demand market has
remained generally flat," McClelland continued. "On the cost side of the house,
our industry, like many others, continues to experience rising costs in a number
of areas including insurance and health care. We will continue to vigorously
pursue growth but also opportunities to improve our cost structure.
"We are continuing to reposition Dynamex in order to decrease our reliance on
the sluggish on-demand market by responding to various, significant distribution
opportunities," said McClelland "Keep in mind that just 36 months ago our
business mix was 60% on-demand services whereas today it represents less than
44% of total sales. This is why the opening of our expanded Chicago Logistics
Center is so important. Sales from operations in the Chicago area represent
slightly less than 10% of our total sales in the U.S. and the opportunities on a
go-forward basis are tremendous. In this facility we have over 50,000 square
feet of warehouse space that is utilized for emergency parts banking plus
deconsolidation and cross-docking related to our local
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DYNAMEX-FIRST QUARTER FISCAL YEAR 2004
December 3, 2003
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and regional same-day distribution service offerings. This facility also houses
our on-demand dispatch operations, plus our local sales and general
administrative functions. The Chicago area is a critically important market area
for Dynamex and therefore this expansion of our capabilities is an extremely
exciting event.
"A transition like ours is challenging but two things are reasonably clear,"
added McClelland. "First, we are capitalizing on new business opportunities.
Second, our people are bottom line oriented as evidenced by our strong results
during a prolonged 'down' market. The net result is strong penetration of our
target markets and further improvement of our market position, achieved without
negatively impacting earnings. We remain highly focused on enhancing the
mid-to-long term prospects for Dynamex.
"We continue to forecast fiscal year 2004 net income of between $0.75 and $0.85
fully diluted earnings per share which would put us on track for a
year-over-year earnings improvement of from 14% to 29%." McClelland concluded.
"Through the balance of the fiscal year, we will continue to focus on increasing
sales, improving net income and strengthening our capital structure by reducing
debt. We believe we are well positioned to achieve these goals and further
improve shareholder value."
DEBT REDUCTION
Long-term debt (including the current portion) was reduced by $0.6 million in
the three months ended October 31, 2003. The Company borrowed $1.0 million under
the bank line-of credit, paid the scheduled quarterly term-loan installment of
$1.375 million and retired the remaining $248,000 of seller financing notes
during the quarter. An additional bi-weekly payroll ($2.1 million), capital
expenditures ($0.9 million) and increases in working capital ($3.4 million),
less $1.5 million of cash payments by Canada to the U.S. for inter-company
interest, royalties and a cash dividend are the principal reasons for the net
increase in the bank line-of-credit.
MARGINS
The gross margin was 28.0% of sales in the current year quarter, down 6.0%
compared to 29.8% in the prior year quarter due to the continuing shift in
business mix from on-demand to other services and higher insurance and claims
expense and down 2.4% compared to 28.7% in the fourth quarter of FY 2003.
EBITDA, as a percentage of sales, was 6.1%, down from 6.6% in the prior year
quarter due, in large part, to higher insurance and claims expense ($360,000),
the Chicago facility relocation ($100,000), higher medical and dental premiums
and state unemployment taxes ($150,000) and stock option expense ($50,000).
DEPRECIATION AND AMORTIZATION
Depreciation and amortization ("D&A") in the first quarter 2004 decreased to
$512,000 from $580,000 in the first quarter of 2003. As a percent of sales, D&A
was 0.7% compared to 0.9% in the prior year. The reduction in D&A in the current
year is primarily attributable to lower capital expenditures in recent years.
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INTEREST EXPENSE
Interest expense for the three months ended October 31, 2003 was $332,000, 46%
below the prior year period. This decrease is primarily attributable to lower
outstanding debt and a lower interest rate that includes a reduction of 100
basis points in the margin on outstanding loans in the current year quarter
versus the prior year quarter due to the Company's improved EBITDA ratio.
OUTLOOK
The following outlook for FY 2004 is provided in connection with Regulation FD
and to ensure that all investors continue to have equal access to information.
The following outlook contains forward-looking statements that involve
assumptions regarding Company operations and future prospects. Caution should be
taken that the actual results could differ materially from those stated or
implied in this and other Company communications.
Management remains focused on the long-term growth and profitability of the
Company. The outlook presented herein is for the full fiscal year and does not
address expected results of operations by quarter.
The Company expects year-over-year sales growth, including the foreign exchange
impact, of between 12% and 16% for fiscal year 2004. The Company expects the
Canadian exchange rate to average $0.74 for the remainder of this fiscal year.
Dynamex expects FY 2004 gross margins to decline versus the prior year as the
percentage of scheduled and distribution and outsourcing sales increases
compared to on-demand sales. The EBITDA margin is expected to range between
5.75% and 6.25% of sales for the full fiscal year. The Company expects SG&A
expenses to increase in absolute dollars but decline as a percentage of sales.
Incremental costs to comply with Sarbanes-Oxley are expected to range between
$300,000 and $400,000 for the remainder of this fiscal year. Depreciation and
amortization is not expected to change significantly in FY 2004 from current
levels. Interest expense is expected to decline in FY 2004 due to a lower level
of debt, relatively stable interest rates, lower amortization of financing costs
and a reduction in the margins charged by the bank group. Capital expenditures
are now expected to be in the $2.0 million range.
The Company expects the effective income tax rate for FY 2004 to be
approximately 30% as available net operating loss carryforwards will offset
taxable income in the U.S. This outlook does not contemplate recognizing the
benefit of available, but unused U.S. tax benefits above those amounts utilized
in the current year to offset taxable income.
The Company is reaffirming its expectation that net income for FY 2004 will
range from $0.75 to $0.85 per fully diluted share. Also, the Company expects to
reduce long-term debt by approximately $7.0 million in FY 2004.
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INVESTOR CALL
The Company will host an investor conference call on Thursday, December 4, 2003
at 10:00 a.m. Central Daylight Time. All interested parties may access the call
Toll-Free at 1-877-692-2592. A participant will need the following information
to access the conference call: Company name - "Dynamex". A telephone replay of
the conference call will be available through December 11, 2003 at Toll-Free
1-877-519-4471, Conference Pin #4342785.
The conference call will also be available on the Internet through CCBN's
website, located at www.fulldisclosure.com, and the link is also available
through the Company's website at www.dynamex.com. Please note that the call will
not be webcast through Vcall's website as previously announced. To listen to the
live call, please go to the website at least fifteen minutes early to register,
download and install any necessary audio software. For those who cannot listen
to the live broadcast, an Internet replay will be available shortly after the
call for 30 days.
* * *
Dynamex is a leading provider of same-day delivery and logistics services in the
United States and Canada. Additional press releases and investor relations
information as well as the Company's Internet e-commerce services package,
dxNow(TM), is available at www.dynamex.com and www.dxnow.com.
This release contains forward-looking statements that involve assumptions
regarding Company operations and future prospects. Although the Company believes
its expectations are based on reasonable assumptions, such statements are
subject to risk and uncertainty, including, among other things, the effect of
changing economic conditions, acquisition strategy, competition, foreign
exchange, the ability to meet the terms of current borrowing arrangements, and
risks associated with the local delivery industry. These and other risks are
mentioned from time to time in the Company's filings with the Securities and
Exchange Commission. In light of such risks and uncertainties, the Company's
actual results could differ materially from such forward-looking statements. The
Company does not undertake any obligation to publicly release any revision to
any forward-looking statements contained herein to reflect events and
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events. Caution should be taken that these factors could cause the
actual results to differ from those stated or implied in this and other Company
communications.
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DYNAMEX INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<Table>
<Caption>
OCTOBER 31, JULY 31,
2003 2003
------------ ------------
(UNAUDITED)
ASSETS
CURRENT
Cash and cash equivalents $ 3,235 $ 4,338
Accounts receivable (net of allowance for doubtful
accounts of $809 and $721, respectively) 29,109 26,109
Prepaid and other current assets 2,185 2,453
Deferred income tax 1,984 1,976
------------ ------------
Total current assets 36,513 34,876
Property and equipment - net 4,766 4,287
Goodwill 45,348 44,743
Intangibles - net 912 981
Deferred income taxes 9,563 10,064
Other assets 779 590
------------ ------------
Total assets $ 97,881 $ 95,541
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT
Accounts payable trade $ 5,664 $ 6,564
Accrued liabilities 15,217 14,805
Current portion of long-term debt 5,499 5,728
------------ ------------
Total current liabilities 26,380 27,097
Long-term debt 13,741 14,116
------------ ------------
Total liabilities 40,121 41,213
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock; $0.01 par value, 10,000 shares authorized;
none outstanding -- --
Common stock; $0.01 par value, 50,000 shares authorized;
11,247 and 11,208 outstanding, respectively 112 112
Additional paid-in capital 74,220 74,064
Accumulated deficit (18,000) (20,250)
Unrealized foreign currency translation adjustment 1,428 402
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 57,760 54,328
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 97,881 $ 95,541
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</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
<Table>
<Caption>
THREE MONTHS ENDED
OCTOBER 31,
------------------------------
2003 2002
------------ ------------
(UNAUDITED)
Sales $ 70,073 $ 61,732
Cost of sales 50,450 43,309
------------ ------------
Gross profit 19,623 18,423
Selling, general and administrative
expenses 15,484 14,341
Depreciation and amortization 512 580
(Gain) loss on disposal of property
and equipment (19) 32
------------ ------------
Operating income 3,646 3,470
Interest expense 332 613
Other (income) expense (88) (14)
------------ ------------
Income before taxes 3,402 2,871
Income tax expense 1,152 903
------------ ------------
Net income $ 2,250 $ 1,968
============ ============
Basic earnings per common share: $ 0.20 $ 0.18
Diluted earnings per common share: $ 0.20 $ 0.17
Weighted average shares:
Common shares outstanding 11,237 11,207
Adjusted common shares - assuming
exercise of stock options 11,515 11,279
</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PERCENTAGE DATA)
CONTINUED
<Table>
<Caption>
THREE MONTHS ENDED
OCTOBER 31,
--------------------------
2003 2002
---------- ----------
(UNAUDITED)
Selected items as a percentage of sales:
Sales 100.0% 100.0%
Cost of sales 72.0% 70.2%
---------- ----------
Gross profit 28.0% 29.8%
Selling, general and
administrative expenses 22.1% 23.2%
Depreciation and amortization 0.7% 0.9%
(Gain) loss on disposal of property
and equipment 0.0% 0.1%
---------- ----------
Operating income 5.2% 5.6%
EBITDA Margin 6.1% 6.6%
EBITDA $ 4,246 $ 4,064
Reconciliation of Non-GAAP Financial Measures:
Net income $ 2,250 $ 1,968
Adjustments:
Income tax expense 1,152 903
Interest expense 332 613
Depreciation and amortization 512 580
---------- ----------
EBITDA $ 4,246 $ 4,064
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</Table>
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DYNAMEX INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
<Table>
<Caption>
THREE MONTHS ENDED
OCTOBER 31,
------------------------------
2003 2002
------------ ------------
(UNAUDITED)
OPERATING ACTIVITIES
Net income (loss) $ 2,250 $ 1,968
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 512 580
Provision for losses on accounts receivable 203 183
Deferred income taxes 493 467
Stock option compensation 49 --
(Gain) loss on disposal of property and equipment (19) 32
Changes in current operating assets and liabilities:
Accounts receivable (3,203) (2,118)
Prepaids and other assets 268 1,206
Accounts payable and accrued liabilities (488) 1,211
------------ ------------
Net cash provided by operating activities 65 3,529
------------ ------------
INVESTING ACTIVITIES
Purchase of property and equipment (928) (257)
Net proceeds from disposal of property and equipment 10 15
------------ ------------
Net cash used in investing activities (918) (242)
------------ ------------
FINANCING ACTIVITIES
Principal payments on long-term debt (1,604) (1,443)
Net borrowings under line of credit 1,000 (1,400)
Net proceeds from sale of common stock 107 --
Other assets and deferred offering costs (126) (257)
------------ ------------
Net cash used in financing activities (623) (3,100)
------------ ------------
------------ ------------
EFFECT OF EXCHANGE RATES ON CASH
FLOW INFORMATION 373 13
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,103) 200
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,338 4,489
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,235 $ 4,689
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 282 $ 487
============ ============
Cash paid for (refunds of) taxes $ 462 $ (75)
============ ============
</Table>
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